MTN Targets $3.2 Billion Capital Investment as Profit Rises

MTN Group Ltd., Africa’s largest mobile-phone operator, plans to boost capital expenditure 38 percent this year after growth in subscriber numbers and currency shifts boosted 2011 earnings.

The company will spend 24.4 billion rand ($3.2 billion) this year to strengthen data services in all 22 markets in which it operates in Africa and the Middle East, Johannesburg-based MTN said today in a statement. The company said it will increase capacity in its largest markets of Nigeria, Iran and South Africa by building third-generation towers and base stations to handle more data traffic.

MTN’s customer numbers rose 16 percent to 164.5 million last year. It forecast 4 million additional subscribers each in Nigeria and Iran in 2012, while South Africa will probably add 2.9 million users this year, the company said, boosting the total number of its clients by 20.3 million, MTN said.

MTN rose 3 percent to 139.20 rand at the close in Johannesburg, the highest price since Jan. 4. The company increased its dividend payout ratio to 70 percent and will continue buying back shares after spending 927.3 million rand on stock purchases in 2011, MTN said.

‘Attracting Attention’

“This is the kind of situation that is attracting attention as investors are looking for solid companies with yield and good dividend prospects,” Ferdi Heyneke, a trader at Afrifocus Securities, said by telephone today. “Operationally, MTN is doing very well.”

Adjusted earnings per share jumped to 10.70 rand from 7.47 rand a year earlier, MTN said. That missed the 10.83 rand median estimate of 16 analysts surveyed by Bloomberg.

MTN will focus its mergers and acquisition strategy on Africa and the Middle East and continue to look for “bolt-on” purchases that will make it the number one or two operator in a country, Chief Executive Officer Sifiso Dabengwa said at a presentation. There are limited opportunities for “transformational” deals that will change the company’s profile, he said.

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